Bob Pittman's Remarks
Part 2
By Selena Maranjian (TMF Selena)
(November 4, 1999) -- Next up was Bob Pittman, who continued offering the audience more reasons to smile broadly at the promise of this company. Again, some things I managed to jot down.
- Today the average AOL session is 55 minutes. Last year it was 47 minutes.
- Revenues were up this year by $1.8 billion, or 53%, to $5.2 billion.
- AOL generated $1 billion in free cash flow this year.
- AOL has the #1 and #2 online services.
- AOL is organized around multiple brands, permitting a shares cost structure and offering a competitive advantage.
- AOL reaches all major audiences, from mass market to Internet -savvy.
- AOL is more competitive and profitable than its competitors.
- CompuServe is the leading value ISP ( Internet service provider) and the second-fastest-growing one in the latest quarter.
- AOL operates the top global service icq. Two-thirds of its members are outside the U.S., more than 2 million in Brazil alone. Other international services are gaining momentum. Germany has more than 1 million.
- MovieFone serves one in five moviegoers in the U.S.
- The iPlanet alliance with Sun is the only eyeballs-to-hardware solution available to businesses, and businesses need this infrastructure.
- AOL 5.0 is a multibandwidth product, adding conveniences, building reliance. In just three weeks after its launch, more than 4 million downloads. This is the fastest adoption ever. Already, some 30% of all AOL sessions are on 5.0.
- MyCalendar is server-based, so it remembers your dates no matter which computer you use to access AOL. More than 2 million people have already registered for MyCalendar. (He paused at this juncture to point out that these numbers were being announced for the first time. They're very new.)
- The AOL Anywhere strategy is unfolding. You'll soon be able to access AOL through cable modems, DSL, satellites, wireless, etc. AOL is working to make access from all of these simple and easy-to-use.
- There's a new wave of growth coming. Consumers think online is a necessity. Businesses are making online a strategic imperative.
Election Results
At this point, it was announced that votes had been preliminarily tabulated and that the various proposals had all passed. Some had passed with as little support as 64% of all shares, and others with as much as 86% of all shares. The official results, we were told, would be in the minutes of the meeting.
Questions and Answers
Steve Case took to the podium again and opened up the floor for questions. He asked people to give their names and where they were from, and to wait for a microphone to get to them, so that everyone could hear, including those watching and/or listening on the Web. (It seems that some 650 people were virtually attending the meeting.) He also explained that he would field the easy questions and Bob would take the hard ones. Many people with questions raised their hands. About 15 were answered. Those who managed to ask questions were from the local area ( Virginia and Maryland ) and from places as far away as Oregon , Arizona , Indiana , Ohio , New Jersey , and El Salvador (from the Web).
Here are just a few of the questions and answers. Again, I'm no stenographer. These are summaries I scrawled on my pad.
Q: What are the geographical limits to AOL Hong Kong?
A: AOL Hong Kong , like our other international services, is staffed mainly with local people, using local resources, and so on. It does set the stage for an eventual entry into China , but that might take a while. In the long run, China will be a tremendous opportunity. In the meantime, icq is building a presence in the region.
Q: (From the Web) Are free ISPs a threat?
A: That model works well in some places, but not the U.S. In the U.K. it hasn't destroyed value for us. As we've learned from our directors who work in traditional media, the blend between subscriber and advertising revenue is critical.
Q: Can we vote for a stock split? (hearty applause and cheers)
A: (Case laughs) Well, now a split is an option, as we've approved the increase in the number of shares. (Interestingly, a few hours after the meeting, the board of directors did vote on and announce a 2-for-1 stock split.)
Q: Is there any pending announcement regarding AT&T?
A: If I told you, I'd have to kill you, so I won't tell you. It's always important to have a dialogue with a company like AT&T. I would hope that at some point, in some way, we'll be able to do some things together. Was that a good duck?
Q: Who do you see as your competition, and what message would you like to send them? (laughter)
A: Well, Microsoft and AT&T are probably our major competitors in the long run, but it's kind of a surprise that they haven't been more so, so far. Also, many companies are trying to become Internet companies these days. Some will be partners, some will be competitors. Our main competitor has to be Microsoft, with its deep pockets. If we have easy-to-use products and keep enhancing them, we'll win. If we get lazy, we'll lose. Execution matters. Anyone can put out press releases.
Q: What will AOL TV offer?
A: The TV world seems ripe for reinvention. Navigating so many channels is cumbersome. The Internet is designed in an opposite way, with infinite choices. The two will blur a little. We can make TV better, make some things interactive, where appropriate.
Q: When we were driving around Dulles, it was hard to find your facility. What are your expansion plans?
A: (Case laughed and joked that it was hard to find so Microsoft wouldn't find it.) A few years ago we had 500 employees. We now have more than 12,000, many here in Virginia . We bought 80 acres a few years ago, and are expanding constantly. We're eager to be able to handle our growth.
Case closed the meeting after it had lasted about 90 minutes, in total. His last comments were (paraphrased):
Most people are still not connected. In the next decade, our opportunity is unbelievable. If we execute successfully, we can continue to make progress. Our goal is to build a medium we can be proud of, to become the most valuable and most respected company in the world.
Last Thoughts
I enjoyed this meeting and am now eager to attend the meetings of other companies in which I hold stock. If you've never attended an annual shareholder meeting, you should give it a whirl. As long as the company is one you're interested in and familiar with, you shouldn't find the meeting boring or hard to understand. Even though you might not feel like an important shareholder, you are still an owner of the company, like anyone else. You still have the right to be heard -- and this is the forum in which to be heard.
